House to vote on budget

State House members are expected to vote today on a $21.3 billion budget proposal that includes modest pay increases for teachers and most state employees, roughly $550 million in borrowing for construction projects, and deep cuts in a controversial community service program for the mentally ill.

The proposal does not include any tax increases. House budget writers rejected Gov. Mike Easley's proposal to raise taxes on cigarettes and alcoholic beverages to help pay for more generous teacher raises and improvements to mental health programs. The budget proposal does include expanded tax breaks to help the working poor, fully disabled military veterans and small businesses that provide health insurance for their employees.

"We didn't make everybody happy, but we have to balance the budget, and I'm satisfied that we did the best we could do with what's available," said Rep. Doug Yongue, a Laurinburg Democrat.

House budget writers spent much of Tuesday in an Appropriations Committee meeting taking up dozens of amendments. Here are some of the ways Easley, lawmakers and other state officials sought to influence the spending plan:

Easley uneasy

Easley criticized House members for cutting his proposed teacher raises and other educational expense increases.

"It's very puzzling to me how a House who was so progressive on education last year can retrench so rapidly this year, failing to fund More at Four for our predominantly minority students, really stiffing the teachers and not providing enrollment increases for college," he said.

Easley said he thinks the state Senate will "fix a lot of these problems."

Rethinking Nucor

House Finance Committee members amended the budget proposal to temper one of the most generous economic incentive packages the state has ever offered to persuade a company to build in one of the state's poorest counties.

A decade ago, lawmakers offered $161 million in tax breaks to Nucor, a Charlotte steel manufacturer, to build a $300 million mill in Hertford County. Nucor pledged to bring 300 jobs paying average annual salaries of $60,000. The company actually brought in nearly 400 jobs and invested $480 million in the plant.

Its fortunes have improved in recent years, causing some lawmakers to question whether it needs the same level of tax relief.

"The Nucor credits need to be reviewed in the light of the positive economic realities for the steel industry in 2008," said Rep. Paul Luebke, a Durham Democrat.

He amended the budget to cap Nucor's tax credit at $1 million annually, after four years of annual credits of more than $10 million.

The amendment also prevents Nucor from receiving a refund from the state that exceeds the company's tax liability.

Pension realignment

Tye Hunter, executive director of the state Office of Indigent Defense Services, would stand to benefit substantially if a particular item in the proposed House budget makes it into law.

A provision in the bill would allow him to shift into the more lucrative retirement plan for judges, district attorneys and court clerks. His position currently is served by the retirement plan for teachers and most state employees.

Hunter, who plans to step down from the position this year, would see his pension jump nearly $40,000 a year with the change. He has been with the state for nearly 30 years and has served as the executive director since 2000.

The state would have to pay roughly $1 million over nine years to catch Hunter up to the better paying retirement system.

Last year, lawmakers changed the law to include public defenders in the judicial pension system, but they inadvertently left out the supervising official.

Rep. Joe Kiser, a Lincoln County Republican, questioned the additional expense Tuesday during a budget hearing. But he said he was reluctant to run an amendment to try to change it. "I would rather somebody else do it," Kiser said. "Tye is one of my friends."

A colleague later ran the amendment, but it failed.

Education aid

The House budget proposal calls for a study to find ways to improve financial aid for community college students.

The provision echoes recommendations by the N.C. Center for Public Policy Research, which last month released a report calling for better financial aid at the state's 58 community colleges. The report quoted a national study that ranked North Carolina third-worst in the country because only 47 percent of the state's community college students have access to federal student loan programs.

Twenty-three of 58 community colleges offer their needy students low-interest federal loans. Those that don't participate in the loan programs fear they'll lose all federal financial aid if too many of their students default on loans.

(The Associated Press contributed to this report.)

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